Traditional business models within universities will be obsolete by 2025, according to a new Ernst & Young report, which highlights opportunities for the private sector as changes occur.
The report, titled University of the Future, is the culmination of a six-month study on the changes occurring in universities both here and overseas.
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The study included interviews with more than 40 leaders from universities, private providers and policymakers, including extended interviews with 15 vice-chancellors around the country.
According to report author Justin Bokor, major structural changes have already occurred in industries including media, retail and entertainment, and higher education is next on the list.
“There’s not a single Australian university than can survive to 2025 with its current business model,” Bokor said in a statement.
“To succeed, Australian universities will need to forge new business models that are dynamic, modern and are fit for the decades ahead.”
“At a minimum, universities will need to get much leaner, both in terms of the way they run the back office and in use of assets.”
In order to survive, universities will need to build “significantly deeper relationships” with industry in the coming decade, according to the report.
“Scale and depth of industry-based learning and internships, for example, will become increasingly critical as a source of competitive advantage,” it said.
“Research higher degree programs and applied research will increasingly be run in partnership with industry.”
In addition, the report said research commercialisation will “go from being a fringe activity to being a core source of funding for many universities’ research programs”.
“Already, venture capitalists, industry and entrepreneurs are increasingly being brought together to commercialise university research,” it said.
With regard to opportunities for the private sector, Ernst & Young said it sees a role for media companies, technology providers, financiers and other industry groups to provide services within the “higher education value chain”.
These services could include content distribution, commercialisation, industry placements and certification, it said.
“Some of these services might be provided on a stand-alone basis. More likely, however, are joint ventures or partnerships with incumbent institutions that bring market credibility and academic capability,” it said.
According to the report, higher education markets have “superb fundamentals” for long-term growth.
“For example, annual spend on higher education in Asia will grow by a trillion dollars or more over the next 15 years – and provide links to burgeoning middle classes in emerging markets,” it said.
“Given the scale of this growth, we encourage potential private sector players to put serious resources into establishing new models and to start securing partnerships.”
The findings come on the back of the latest AMP.NATSEM report, which shows Australians with postgraduate degrees will, over their working lives, earn almost double that of people with a Year 11 or lower qualification.